Portugal drifts away from European economic convergence

Portugal dropped from 81% to 76.6% in the EU’s average wealth per inhabitant ranking as a measure of Purchasing Power Parity and fell to 22% overall in the ranking according to the country’s National Statistics Institute (INE).

It means that it is drifting away from the long-held goal of successive governments of achieving convergence with more productive economies in Europe in terms of Purchasing Power Parity (PPP).

The indicator measures the level of prosperity of EU citizens in a country which has seen its resident population increase from 10.2 million at the turn of the millennium to 11.4 million by 2025 almost exclusively down to the influx of overseas immigrants into Portugal.

In fact, between 2021 and 2025 alone the number of foreign residents registered in the country more than doubled to 1.5 million or 14% of the total population.

In a simulation by the online news source ECO using the latest population data, Portugal ultimately drops from 81% to 76.6% of the European Union average in Gross Domestic Product (GDP) per capita measured in Purchasing Power Parity (PPP), the indicator used by Eurostat to compare average wealth between countries adjusted for price differences, and falls to 22nd place in the ranking.

The new calculations do not mean that the Portuguese have become poorer overnight, but they show that the wealth produced each year has to be divided among more residents than the previous figures captured.

The effect is statistical, but it calls into question the interpretation of Portuguese economic convergence with Europe argued by the governments of António Costa and Luís Montenegro.

And that means that Portugal is effectively poorer compared to other countries in the Union because GDP growth was due to the increase in population alone.

Source: ECO Online/INE.